Question

The following balances has been extracted from the trial of M/s Runway Shine Ltd. Prepare a trading and profit and loss account and a balance sheet as on March 31, 2017.

Account Title	Amount ₹	Account Title	Amount ₹
Purchases	1,50,000	Sales	2,50,000
Opening stock	50,000	Return outwards	4,500
Return inwards	2,000	Interest received	3,500
Carriage inwards	4,500	Discount received	400
Cash in hand	77,800	Creditors	1,25,000
Cash at bank	60,800	Bill payable	6,040
Wages	2,400	Capital	1,00,000
Printing and	4,500
Stationery
Discount	400
Bad debts	1,500
Insurance	2,500
Investment	32,000
Debtors	53,000
Bills receivable	20,000
Postage and	400
Telegraph
Commission	200
Interest	1,000
Repair	440
Lighting Charges	500
Telephone	100
charges
Carriage outward	400
Motor car	25,000
	4,89,440		4,89,440

Adjustments
1. Further bad debts ₹ 1,000. Discount on debtors ₹ 500 and make a provision on debtors @ 5%.
2. Interest received on investment @ 5%.
3. Wages and interest outstanding ₹ 100 and ₹ 200 respectively.
4. Depreciation charged on motor car @ 5% p.a.
5. Closing Stock ₹ 32,500.

Answer 1

Dr.	Trading Account				Cr.
Particulars		Amount ₹	Particulars		Amount ₹
Opening Stock		50,000	Sales	2,50,000
Purchases	1,50,000		Less: Return Inwards	2,000	2,48,000
Less: Return Outwards	4,500	1,45,500	Closing Stock		32,500
Carriage Inwards		4,500
Wages	2,400
Add: Outstanding Wages	100	2,500
Gross Profit		78,000
		2,80,500			2,80,500

Profit and Loss Account
Dr.						Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Carriage Outward			400	Gross Profit		78,000
Printing and Stationery			4,500	Interest Received		3,500
Discount			400	Discount Received		400
Bad Debts		1,500		Interest Received on Investment		1,600
	Add: Further Bad Debts	1,000
	Add: New Provision	2,600	5,100
Discount on Debtors			500
Insurance			2,500
Postage and Telegraph			400
Commission			200
Interest		1,000
	Add: Outstanding Interest	200	1,200
Repair			440
Lighting Charges			500
Telephone Charges			100
Depreciation on Motor Car			1,250
Net Profit			66,010
			83,500			83,500

Balance Sheet
Liabilities		Amount Rs	Assets				Amount Rs
Creditors		1,25,000	Cash in Hand			77,800
				Add: Interest Received		1,600	79,400
Bills Payable		6,040	Cash at Bank				60,800
Capital	1,00,000		Investment				32,000
Add: Net Profit	66,010	1,66,010	Debtors			53,000
				Less: Further Bad Debts		1,000
Outstanding Interest		100		Less: New Provision		2,600
Outstanding Wages		200		Less: Discount on Debtors		500	48,900
			Motor Car			25,000
				Less: Depreciation		1,250	23,750
			Bills Receivable				20,000
			Closing Stock				32,500
		2,97,350					2,97,350